Sex discrimination case against Kay and Jared jewelers illustrates how forced arbitration undermines the public interest

The Washington Post recently ran a story about a class action sex discrimination case against Sterling Jewelers, the company behind Jared the Galleria of Jewelry and Kay Jewelers. The women who filed the case initiated it in 2008 but the public knew nothing about the case until recently because Sterling made its employees agree to bring claims against the company in arbitration. Arbitration, unlike court proceedings, can enable a company to keep damaging information about the company away from the public eye.

What we learned from the Washington Post story is that the plaintiffs in the case produced about 250 sworn statements from women who claim that Sterling fostered a corporate culture of abuse toward women. The women who made these statements spoke of a culture where male managers treated their female subordinates as sexual objects. These men demanded that the women they managed acquiesce to their sexual harassment in order to get ahead at Sterling. The plaintiffs also allege that Sterling paid female employees less than similarly situated male employees.

If the plaintiffs who filed this case had been allowed to file it in court, this evidence of widespread sex discrimination would have come to light far sooner. A class action such as this likely would have grabbed headlines back in 2008 when it was filed. Because Sterling was allowed to force the case into secretive arbitration proceedings, the public did not know about it. Women who applied for jobs at Sterling did not know about these allegations of widespread sex discrimination at the company. If the allegations are true, some of the women who obtained jobs at Sterling without knowledge of the allegedly toxic culture likely became victims of that culture.

As bad as this case is from the standpoint of public accountability, it could have been worse. In this case, the women who sued Sterling at least had the ability to pursue their case as a class action. Some companies prohibit class actions in their arbitration agreements and courts have permitted them to do so. Class actions are a mechanism that most efficiently holds companies accountable for systematic violations of employees’ rights. Without class actions, employees must bring their claims against the employer one at a time. Many employees do not have the resources to mount their own legal challenges against a powerful corporation and, as such, class action bans result in many employees losing out on relief and the company getting away with violating employees’ rights.